5 Stocks Leading the Generic Drug Charge

Between legislation and a wave of patent expiration, these pharmaceuticals are sitting pretty

The pharmaceutical industry’s ongoing plunge over the patent cliff isn’t exactly a secret. But some of the numbers illustrating the paradigm shift from a brand-name-driven focus to a generic-drug-driven focus are nothing less than amazing.

Just look at the bite generics took out of name brands. Prescriptions of generics grew 8% last year in the United States, while prescriptions for name-brand drugs slumped nearly 21%. More than that, the total dollars spent on brand-name drugs actually fell in 2012 — the first decline in a long time.

The IMS Institute for Healthcare Informatics projects that by 2017, 87% of U.S. prescriptions will be filled by generic options, and though generics are priced at an average of 15% of the brand-name version of the same drug, the total “spend” on pharmaceuticals won’t actually fall that much. Rather, some experts believe the combination of Obamacare and more affordable generics means more patients will actually fill prescriptions they couldn’t or wouldn’t before.

In other words, it’s a great time to be a generic drug maker, particularly for the United States market. It’s not a bad time to be a generic drug maker investor either. Here are five names interested investors might want to consider.